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Exhibit 7.6
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EARN-OUT AGREEMENT
EARN-OUT AGREEMENT, dated as of March 17th, 1998 (this
"Earn-Out Agreement"), by and among Wang Laboratories, Inc., a Delaware
corporation ("Wang"), and Ing. C. Olivetti & C. S.p.A., an Italian corporation
("Olivetti").
This Earn-Out Agreement is being entered into simultaneously
with the consummation of the transactions contemplated by the Stock Purchase
Agreement, dated as of February 28, 1998 (the "Agreement"), by and among Wang,
Wang Nederland BV, Olivetti, Olivetti Sistemas e Servicios Limitada and Olivetti
do Brasil S.A., as an inducement for Olivetti to consummate such transactions.
Capitalized terms used and not otherwise defined herein shall have the
respective meanings ascribed to them in the Agreement. This Earn-Out Agreement
is a Related Agreement and an Indemnified Related Agreement with the meaning of
the Agreement.
NOW, THEREFORE, in consideration of the foregoing, the
respective representations, warranties, covenants and agreements set forth in
the Agreement and herein and other good and valuable consideration, the adequacy
and receipt of which are hereby acknowledged, and intending to be bound hereby,
the parties hereto hereby agree as follows:
ARTICLE I
EARN-OUTS
1.1 Wang EBITDA Earn-Out. Not later than March 31,
2000, Wang shall deliver to Olivetti a report (the "Wang EBITDA Report")
reflecting the amount of consolidated earnings, before interest, taxes,
depreciation, amortization and restructuring charges, of Wang and its
subsidiaries for the period from January 1, 1998 through December 31, 1999 (the
"WANG EBITDA Measuring Period"), as adjusted (the "Wang EBITDA Adjustment") in
accordance with Section 1.5 to exclude the effects of any acquisitions or
divestitures made by Wang (other than the transactions contemplated by the
Agreement) during the Wang EBITDA Measuring Period (the "Wang EBITDA Amount").
If the Wang EBITDA Amount exceeds U.S. $550,000,000, not later than ten Business
Days after
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delivery of the Wang EBITDA Report, Wang shall pay Olivetti an amount,
in U.S. dollars in immediately available funds, equal to the lesser of
(i) the sum of (aa) 25% of the first U.S. $40,000,000 of the amount by
which the Wang EBITDA Amount exceeds U.S. $550,000,000 (or if the Wang
EBITDA Amount exceeds U.S. $550,000,000 by less than U.S. $40,000,000,
25% of such excess) and (bb) 50% of the amount, if any, by which the
Wang EBITDA Amount exceeds U.S. $590,000,000 or (ii) U.S. $28,000,000.
If Wang merges or consolidates with another corporation during the WANG
EBITDA Measuring Period, the entity surviving such merger or
consolidation shall prepare the Wang EBITDA Report on pro forma basis
as if such merger or consolidation had not occurred.
1.2 Olsy EBIT Earn-Out. Not later than March 31,
2000, Wang shall deliver to Olivetti a report (the "Olsy EBIT Report")
reflecting the amount of consolidated earnings, before interest, taxes and
restructuring charges and including dividends from Noncontrolled Subsidiaries,
of the "commercial" operations of Olsy and the Controlled Subsidiaries in Italy
for the period from January 1, 1998 through December 31, 1999 (the "Olsy EBIT
Measuring Period"), as adjusted (the "Olsy EBIT Adjustment") in accordance with
Section 1.5 to exclude the effects of (i) any acquisition or divestiture made by
Olsy or a Controlled Subsidiary during the Olsy EBIT Measuring Period or (ii)
the transfer of any costs that were Olsy headquarters costs as of December 31,
1997 to the "commercial" operations of Olsy and the Controlled Subsidiaries in
Italy during the Olsy EBIT Measuring Period (the "Olsy EBIT Amount"). If the
Olsy EBIT Amount exceeds 185,000,000,000 Italian lira, not later than ten
Business Days after delivery of the Olsy EBIT Report, Wang shall pay Olivetti an
amount, in Italian lira in immediately available funds, equal to the lesser of
(i) 50% of the amount of such excess or (ii) 25,000,000,000 Italian lira. For
purposes of the Olsy EBIT Report "commercial" operations of Olsy and the
Controlled Subsidiaries in Italy shall include all of Wang's commercial
operations in Italy during the Olsy EBIT Measuring Period.
1.3 Olsy Revenue Earn-Out. Not later than March 31,
2000, Wang shall deliver to Olivetti a report (the "Olsy Revenue Report")
reflecting the amount of consolidated revenue (excluding standard product
revenue) of the "commercial" operations of Olsy and the Controlled Subsidiaries
in Italy for the period from January 1, 1998 through December 31, 1999 (the
"Olsy Revenue Measuring Period"), as adjusted (the "Olsy Revenue Adjustment") in
accordance with Section 1.5 to
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exclude the effects of any acquisition or divestiture made by Olsy or a
Controlled Subsidiary during the Olsy Revenue Measuring Period (the "Olsy
Revenue Amount"). If the Olsy Revenue Amount exceeds 2,060,000,000,000 Italian
lira, not later than 10 Business Days after delivery of the Olsy Revenue Report,
Wang shall pay Olivetti an amount, in Italian lira in immediately available
funds, equal to the lesser of (i) 20% of the amount of such excess or (ii)
25,000,000,000 Italian lira. For purposes of the Olsy Revenue Report
"commercial" operations of Olsy and the Controlled Subsidiaries in Italy shall
include all of Wang's commercial operations in Italy during the Olsy Revenue
Measuring Period.
1.4 Interim Reports. Not later than March 31, 1999,
Wang shall deliver to Olivetti, for informational purposes only, interim reports
on the Wang EBITDA Amount, the Olsy EBIT Amount and the Olsy Revenue Amount for
the period from January 1, 1998 through December 31, 1998.
1.5 Approval of Adjustments. The Wang EBITDA
Adjustment, Olsy EBIT Adjustment and Olsy Revenue Adjustment, in each case, if
any, must be approved by the Board of Directors of Wang (the "Board"). Not later
than 10 Business Days prior to submission of any proposed Wang EBITDA
Adjustment, Olsy EBIT Adjustment or Olsy Revenue Adjustment to the audit and
finance committee of the Board (or any other committee of the Board charged with
reviewing any such proposal prior to submission thereof to the Board), Wang
shall review with Olivetti the proposal to be submitted to such committee. If
Olivetti disagrees with any such proposal and Wang and Olivetti are not able to
resolve such disagreement prior to the submission of such proposal to the Board,
Olivetti shall be entitled to, and afforded the opportunity to, explain its
disagreement therewith to the Board before the Board acts thereon.
1.6 Financial Statements. The Wang EBITDA Amount
shall be derived from the applicable financial statements of Wang and its
subsidiaries for the applicable periods, which shall be prepared in accordance
with U.S. GAAP applied on a consistent basis, and the books and records relating
thereto. The Olsy EBIT Amount and the Olsy Revenue Amount shall be derived from
the Italian statutory reports prepared by Wang for the "commercial" operations
of Olsy and the Controlled Subsidiaries in Italy for the applicable periods and
the books and records relating thereto.
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ARTICLE II
GENERAL PROVISIONS
2.1 Amendment and Modification. This Earn-Out
Agreement may be amended, modified and supplemented only by written agreement of
Wang and Olivetti.
2.2 Waiver of Compliance. Except as otherwise
provided in this Earn-Out Agreement, any failure of any of the parties to comply
with any obligation, covenant, agreement or condition herein may be waived by
the party entitled to the benefits thereof only by a written instrument signed
by the party granting such waiver, but such waiver or failure to insist upon
strict compliance with such obligation, covenant, agreement or condition shall
not operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Earn-Out Agreement requires or permits consent by or on
behalf of any party hereto, such consent shall be given in writing in a manner
consistent with the notice provisions set forth in Section 2.3 and the
requirements for a waiver of compliance as set forth in this Section 2.2.
2.3 Notices. All notices and other communications
hereunder shall be in writing and shall be sent by hand delivery or overnight
courier, in each case receipt acknowledged, or registered or certified mail, in
each case with postage prepaid and return receipt requested, to the respective
parties at the following addresses:
If to Wang, to:
Wang Laboratories, Inc.
000 Xxxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxxxx Xxxxxx
Attention: Xxxxxx X. Xxxxxx, Senior
Vice President, General
Counsel and Secretary
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
and
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Gianni, Origoni & Partners
20121 Milano
Xxxxxx Xxxxxxxxxx, 0
Xxxxx
Attention: Avv. Xxxxx Xxxxxxx
If to Olivetti, to:
Ing. C. Olivetti & C. S.p.A.
Xxx Xxxxxx, 00
00000 Xxxxx
Xxxxx
Attention: Managing Director
with a copy to:
Erede E Associati
Xxx Xxxxxxxxxx, 00
00000 Xxxxxx
Xxxxx
Attention: Avv. Xxxxxxx Xxxxxxxx
and
Xxxxxx & Xxxxx
00 Xxxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Xxxxxxx
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Any party may change its address for receiving notice by written notice given to
the other parties. All notices and other communications hereunder shall be
deemed to have been duly given as of the earlier of (a) the date received at the
address and in the manner provided above or (b) the date receipt is
acknowledged.
2.4 Assignment. This Earn-Out Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, but
neither this Earn-Out Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto without the prior
written consent of the other parties, except by operation of law.
2.5 Governing Law. This Earn-Out Agreement shall be
governed by the laws of the State of New York (without giving effect to the
principles of conflicts of law thereof except for General Obligations Law
Section 5-1401) as to all matters, including but not limited to, matters of
validity, construction, effect,
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performance and remedies. The invalidity or unenforceability of any provision of
this Earn-Out Agreement shall not affect the validity or enforceability of any
other provision.
2.6 Counterparts. This Earn-Out Agreement may be
executed in two or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument.
2.7 Dispute Resolution. Any dispute between Wang and
Olivetti arising out of this Earn-Out Agreement shall be resolved in accordance
with Section 12.12 of the Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Earn-Out Agreement to be duly executed as of the day and year first above
written.
WANG LABORATORIES, INC.
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
Title:Senior Vice President
ING. C. OLIVETTI & C. S.P.A.
By: /s/ Xxxxxx Xxxxxxxx
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Name: Xxxxxx Xxxxxxxx
Title:Attorney-in-fact
